NEW YORK--(BUSINESS WIRE)--On the effective date of Sept. 10, 2014, Fitch Ratings will upgrade the
long-term rating to 'AA+' from 'AA' and the short-term rating to 'F1+'
from 'F1' assigned to the Northern California Power Agency's (NCPA)
Hydroelectric Project Number One revenue bonds consisting of $85,160,000
2008 refunding series A (variable rate demand bonds) and $3,165,000
($2,105,000 currently outstanding) 2008 taxable refunding series B
(taxable variable rate demand bonds). The Rating Outlook is Stable for
the long-term rating. The rating action is in connection with: (i) the
substitution of the irrevocable direct-pay letters of credit (LOCs)
previously provided by Citibank, N.A. (rated 'A/F1', Stable Outlook)
with substitute LOCs to be issued by Bank of Montreal (rated 'AA-/F1+',
Stable Outlook); and (ii) the mandatory tender of the bonds, which will
occur on Sept. 10, 2014.

KEY RATING DRIVERS

The long-term rating will continue to be determined using Fitch's
dual-party pay criteria and will be based jointly on the underlying
rating assigned to those bonds by Fitch (currently rated 'A+ ', Stable
Outlook), and the rating assigned by Fitch to the Bank of Montreal
(rated 'AA-', Stable Outlook), which will provide the substitute LOCs as
support for the bonds. The short-term 'F1+' rating will be based solely
on the substitute LOCs. For information about the underlying credit
rating see press release dated May 13, 2014 available at 'www.fitchratings.com'.

Fitch's dual-party pay criteria consider the likelihood of the failure
of both a rated obligor and a bank LOC provider. The methodology results
in a long-term rating that is up to two notches higher than the stronger
of the two credits if the following conditions are met: (1) both
entities have a rating of 'A' or higher; (2) the transaction is
structured such that payments from both the municipal issuer and the
bank are in the flow of funds and both entities would have to fail to
perform before the bonds defaulted; and (3) the credit of the bank and
the rated obligor have no more than a medium degree of correlation.
Fitch has determined a low degree of correlation between Bank of
Montreal and the obligor which results in a rating of 'AA+' for the
bonds. If either the underlying bond rating or the bank rating were
downgraded to 'A-' or lower, the dual-party pay criteria could no longer
be applied, and the long term rating assigned to the bonds would then be
adjusted to the higher of the bank rating and the underlying bond rating.

Pursuant to the substitute LOCs, the bank is obligated to make regularly
scheduled payments of principal of and interest on the bonds in addition
to payments due upon maturity, acceleration and redemption, as well as
purchase price for tendered bonds. The ratings will expire upon the
earliest of: (a) Sept. 9, 2019, the initial stated expiration date of
the substitute LOCs, unless such date is extended; (b) conversion to
other than the daily or weekly rate modes (series A), or to other than a
weekly mode (series B); (c) any prior termination of the LOCs; and (d)
defeasance of the bonds. The substitute LOCs provides full and
sufficient coverage of principal plus an amount equal to 202 days of
interest at a maximum rate of 12% based on a year of 365 days and
purchase price for tendered bonds. The Remarketing Agent for the bonds
is Citigroup Global Markets.

RATING SENSITIVITIES

As described above, the long-term rating is tied to the long-term rating
assigned to the bonds and the long-term rating that Fitch maintains on
the bank providing the substitute LOC. Changes to one or both of these
ratings may affect the long-term rating assigned to the bonds.

The short-term rating is exclusively tied to the short-term rating that
Fitch maintains on the bank providing the substitute LOC and will
reflect all changes to that rating.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE
RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR
RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY
CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
WEBSITE.